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the first advertising agents 1843 volney palmer agent for media, not advertisers 1864 - george p. rowell “the johnny appleseed of advertising” Rowell’s American Newspaper Directory space wholesaler shared his “secret” 1888 - “Printer’s Ink”
the first advertising agency n.w. ayer & son founded in 1864 by francis w. ayer, 20 “& son” made the business seem more established worked for advertiser slogan - “keeping everlastingly at it brings success.”
4 full-service agency functions: today, “full-service” agencies provide the following: account management creative media planning and media placement (media buying) research many adding “below the line” services - PR, sales promotion, Interactive
major types of agency: mega-agency groups independent agencies national, regional, and local specialized/niche agencies agency service suppliers media buying, creative services
mega-agency groups prompted by mergers and client globalization financial pressures service multinational accounts subsidiaries provide“IMC” (integrated marketingcommunication) services
Some mega-agency groups:OmniCom Group $4.15 billionWPP Group $3.64 billionInterpublic Group $3.38 billionDentsu (Japan) $1.98 billionYoung & Rubicam $1.49 billion
mega-agency groups: WPP Group $6.69 billion (including Y&R) Omnicom Group 5.74 billion Interpublic Group $5.08 billion Havas $2.39 billion Publicis $2.17 billion (including Saatchi)
mega-agency pros & cons positives: negatives: larger talent pool people vs. profit negotiating clout creativity vs. size financial rewards conflict of account security interests competitive edge people business strong partnerships more services international link
national, regional & local these are independent agencies there are now fewer national agencies which are not part of mega-agency groups regional and local agencies work with smaller clients who are usually located nearby
Famous ad agencies1. J. Walter Thompson2. Leo Burnett Worldwide3. McCann-Erickson Worldwide4. BBDO Worldwide5. Grey Advertising6. DDB Worldwide7. Ogilvy & Mather Worldwide8. FCB Worldwide9. Y&R Advertising10. Publicis Worldwide
specialized/niche agencies industry specialists ethnic agencies internet agencies business-to-business agencies creative boutiques and design houses
other suppliers provide “unbundled” services one part of what an agency does media buying services freelancers & consultants production companies in-house or “house” agencies agencies owned by clients
in-house agencies advantages & disadvantages familiarity specialization fast service cost savings confidentiality
in-house agencies advantages & disadvantages familiarity objectivity specialization resources fast service fresh ideas cost savings extra cost and confidentiality overhead
2 primary roles of agencies idea generation brand-building
idea generation manufacture ideas ideas are lifeblood of the agency create intellectual capital create and sell different kinds of ideas marketing strategies promotional opportunities even new product ideas...
brand-building “The agency’s purpose is to createand direct communication about aproduct or service so that the brandis perceived to have a uniquevalue or brand personality.” Let’s look at some examples...
brand-buildingmeans integration more and more, agencies are being involved in all areas of marketers’ brand-building activities today, it’s more than advertising it’s integrated marketing communications (IMC)
integrated marketing communicationthe imc promotion mix advertising public relations direct response sales promotion personal selling
structure & organization what agencies do.and how they’re organized to do it.
7 primary services: complete a marketing analysis develop an advertising plan prepare a creative strategy create advertising executions develop and implement a media plan handle billing and payments integrate other marketing communications
4 functions of full-service agencies account management creative media planning and placement research
agency organization chart B a do or f D et r i co s r [ h i mnC O C ar a / E ] Pe i e t r sd n [ O ] C O O e Mr e i g t r a k tn h Sr t g t ae y O i eMn g mn f c f a ae e t C m u i ai n o m nc t o s Rve B a d ei w or [ e s n e, Pr o n l Sr i e e vc s [ a a mn Mn g e t Ac u t n , c o ni g [ R e c] P , t. Cm i t e o m e] t L g l e c] e a, t .Ac u t Mm co n g t. Ce t v r ai e Rs a c ee r h M i Dp. e a e t d D et r i co r Ee C xc D D et r i co r D et r i co r Mn g mn a ae e t As ca e soi t P oe t rjc As cae soi t S pr i o u e vs r Ce t v r ai e Mn g r a aes M i e a d D et r i co r D et r i co r Ac u t co n Ce t v r ai e Rs a c ee r h M i e a d E e ui e x c tv Go p ru: As s a t s i t ns S pr i o u e vs rAs . Ac u t st co n Cp S v . & o y pr At S p r i o r u e vs r M ie a d M i e a d E e ui e x c tv C p wi e s o y rt r & r D et r At i c o s r Pa n r l ne Byr ue Broadcast Print Analysts Production Production Traffic
account management liaison between agency and client responsible for understanding... the client’s business the client’s marketing needs strategy developmentrepresenting client point of viewwithin the agency
account management A c c o u n t M g m t. D ir e c to r account management director M a n a g e m en t. S u p e r v is o r management supervisor A ccount S u p e r v is o r account supervisors A ccount account executives E x e c u tiv e assistant account execsA sst. A c c o u n t A ccoun t E x e c u tiv e C o o r d in a to r account coordinators Traffic traffic
creative department responsibility the creative department is responsible for creating and producing the print and broadcast advertising strategy is key good creative work is always guided by a creative strategy that sets forth goals to be accomplished and key message points to be relayed
creative department S tr a te g y R e v ie w B oard executive & group creative E x e c u tiv e directors creative director C r e a tiv e D ir e c to r (E C D ) C r e a tiv e D ir e c to r (C D ) associate creative director A s s o c ia te C r e a tiv e D ir e c to r (A C D ) copywriters C r e a tiv e art directors G roup:C opy Spvr. & A r t S u p e r v is o r broadcast producers print production managers C o p y w r ite r s & A r t D ir e c to r s Broadcast Print Production Production Traffic traffic coordinators
media department The media department has two main functions - planning and buying. The planning group handles more strategic marketing and media issues. The buying group handles media negotiations and implementation.
media department media director M e d ia D ir e c to r A s s o c ia te M e d ia associate media directors D ir e c to r media supervisors M e d ia media planners S u p e r v is o r Media M e d ia M e d ia PlanP la n n e r B uyer media buyers Analysts media analysts
big changes in themedia department mega-agency media departments have now become profit centers agencies have set up their media departments as free-standing units many large clients now look at media as a separate service
research departmentinterpret market environment gather and analyze research data. primary and secondary techniquesdetermine consumer needs/perceptions understand problemsadvise how ads can meet Research strategic goals Report help find solutions
research departmentR esea rchD ir e c to r research director P r o je c tM anagers research project managers R esea rch research assistantsA s s is ta n ts Research Outside outside research Report Research Suppliers specialists
3 ways agencies make money commissions usually 15% of gross costs fees usually based on negotiated hourly rate incentives still relatively new and problematic usually based on performance goals
agency commissions media commission system 15% media commission adjustable commission rates negotiate to match client budget sliding scale markups-production & service add a percentage markup to costs 17.65% of net = 15% of gross
4 types of fee systems fixed fee (retainer) cost-plus fee performance fee hybrid fee & commission
agency trendsclutter, overload, “overchoice” increased media options increasing audience fragmentation more messages everywhere doing more with less economic pressures, “downsizing” ongoing client budget pressures managing size more mergers and mega-agencies
agency trends managing technology interactive marketing e-mail, web sites improving internal systems account planning re-engineering agency organization improving delivery of imc services
in conclusion...as long as marketers needideas to build their brands,they’re going to needadvertising agencies